The ruling Zimbabwe African National Union Patriotic Front (Zanu-PF) party said at its 14th National People’s Conference in December 2013 that there is need to streamline the number of diamond miners in Marange.
Finance minister Patrick Chinamasa had said the previous month (November 2013) that the Treasury did not receive proceeds from diamond revenue in the nine months to September 2013.
Harare had targeted to receive $40 million from diamond sales during the period under review.
Chinamasa’s predecessor, Tendai Biti of the opposition Movement for Democratic Change (MDC), was forced to cut Zimbabwe’s budget a year earlier to $3.4 billion from $4 billion after receiving $41 million from $600 million that he expected from diamond sales.
“[We resolved] to rationalise the number of players in the diamond mining sector to promote efficiency and transparency,” the party said at the end of the conference.
Zimbabwean president Robert Mugabe also told his party’s members at the time that the inclusion of several players in the diamond mining sector had resulted in increased incidences of smuggling and government would act decisively on this.
“Diamonds, we would want to centralise that. If you look at Botswana, even in South Africa, Angola, Namibia it’s not free for all. It’s only government and partners who produce diamonds,” he said.
Zimbabwe had licenced Mbada Diamonds, Anjin Investments, Marange Resources, Diamond Mining Company, Jinan, Kusena and Gye Nyame to mine diamonds in Marange.
The miners, apart from Marange Resources, had established joint ventures with the state-owned Zimbabwe Mining Development Corporation (ZMDC).
Gye Nyame’s licence was later revoked.
However, the mines minister Walter Chidhakwa said in an interview I had with him last November that the first step of the merger involved [Marange Resources], Kusena and Gye Nyame.
“[They are] now trying to integrate into one work force. We think that it’s the financial accounts which now need to be intergrated and once that happens they will then have one company and SBUs (strategic business units),” he said.
I asked him, how this would work out and he said: “Marange [will operate] as an SBU and of course Gye Nyame and Kusena will not call them SBUs of Marange resources. In fact what we are trying to do is to say that at the top is a company that we call the Zimbabwe Diamond Mining Company and below it you then have Marange Resources, which takes care of the Marange area because the question is if you call the national company Marange and you discover more diamonds in Beitbridge is it going to be Marange? … I have not been able to get the final report now but am sure they should be finalising the financial accounts in which case once the financial accounts are ready we will then bring everybody together and move forward.”
I further asked him, how the government would factor in other mining companies such as Mbada and Anjin, and he said: “The first stage is actually to sort Marange Resources, bring in the ones that are not operating – Kusena and Chinyame – we will then see what happens next… You have to realise that the discussions are not easy discussions because we have signed investment agreements and we still want to promote investments and we can’t be seen to be nationalising, we have to find a way that ensures that our partners are not unhappy but at the same time that we achieve the objective that we want to achieve.”
Fast forward to March 2015 and the minister was talking a different language.
He was quoted by Reuters as saying that Zimbabwe now wanted to merge all diamond mining companies in the country into one big firm, including Murowa, which is 78 percent-owned by Rio Tinto.
Chidhakwa said the State would own half of the shares in the envisaged firm.
"We are very clear, this is a regulatory matter and we have said to them the only way you can participate in diamond mining in Zimbabwe is by being in this company," he said.
The new outfit would be known as the Zimbabwe Consolidated Diamond Company (ZCDC).
Chidhakwa said companies that did not want to merge would be given compensation and allowed to leave, which contradicts the careful approach he highlighted during the interview I had with him.
While, most people agreed to the need for Harare to streamline operations in Marange citing lack of transparency and truncated inflow of revenue, it was the inclusion of Murowa and DTZ-OZGEO that set tongues wagging.
Questions raised included, how the shareholding amongst the miners would be decided considering that some, in the case of Rio Tinto’s Murowa, had invested a lot in machinery and exploration, while others were just ‘scooping’ alluvial diamonds in Marange with less sophisticated machinery.
Miners in Marange did not invest in any prospecting and exploration work as they were given concessions known to have diamonds scattered around.
All they needed was simply to sift through the sand to pick the stones and some of them never bothered to invest in machinery needed to dig deeper.
So, for miners with such backgrounds to be roped in together with Murowa and DTZ-OZGEO was said to be unfair.
Even in Marange, some firms appeared to be doing better than others, for example Mbada Diamonds.
The company even noted last year that it was planning to invest “heavily” in conglomerate and kimberlitic mining.
It would be attractive for Harare to merge all non-perfoming firms into one and perhaps leave Mbada Diamonds on its own given that Harare already had a 50 percent shareholding in the company.
If Zimbabwe goes ahead with its plans to merge all diamond mines, does it mean that the country will not allow new companies to prospect for diamonds?
If it does, and find an economic mine, how will it be intergrated in ZCDC.
These questions present a potential headache for Harare if it goes ahead with the current plan intact.
What makes sense is to allow firms operating outside Marange continue mining, but let ZCDC acquire shareholdings in these operations.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
